Hello everyone. I am new to investing and bigger pockets. My dad handed me over a rental. It needs $20k worth of work. I plan to finish it in 6 months. It should bring the ARV to around $85k. I am thinking i will refinance for 40K and pay off the rehab loan and use the other 20K to buy the next property. am i doing something wrong? Guidance appreciated.
*This link comes directly from our calculators, based on information input by the member who posted.
Specialist · Member since 2025 · 483 posts · 270 votes
11mo
Good start, but tighten the plan: confirm the true ARV with comps, get an insurance-ready scope of work, and line up your exit before you swing a hammer. Make sure the stabilized rent supports the new payment with reserves, and check seasoning rules for your target refi product so the cash-out is actually available on your timeline. Compare two exits now: a small cash-out refi vs. a first-position HELOC on the finished value; pick the one that leaves you positive cash flow and pays off the rehab lender cleanly. One red flag: don't count on pulling an exact amount for the next deal unless the appraisal and LTV pencil. Next step this week: get a lender quote sheet for both exits and a PM rent letter to validate the numbers.
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
11mo
Derek,
Before you pull the trigger make sure you have a bank/lender offer you a pre-approval on the numbers. There are not many lenders who will offer a mortgage that low typically they offer a mortgage for the completed project but not the renovations unless it's a Hard Money loan.
If you go Hard money it's going to be a high rate, multiple points/fee's and hopefully No prepayment penalty.
Hello everyone. I am new to investing and bigger pockets. My dad handed me over a rental. It needs $20k worth of work. I plan to finish it in 6 months. It should bring the ARV to around $85k. I am thinking i will refinance for 40K and pay off the rehab loan and use the other 20K to buy the next property. am i doing something wrong? Guidance appreciated.
*This link comes directly from our calculators, based on information input by the member who posted.
Hey @Derek Smith, welcome to the BP Forum! I think you'll be hard pressed to get a loan from an HML for only $40k - perhaps maybe a PML. Where is the property located? Assuming this property has one unit, with rent of $1,400, I would estimate the ARV is around $140k, not $85k.
Specialist · Member since 2025 · 483 posts · 270 votes
11mo
Good start, but tighten the plan: confirm the true ARV with comps, get an insurance-ready scope of work, and line up your exit before you swing a hammer. Make sure the stabilized rent supports the new payment with reserves, and check seasoning rules for your target refi product so the cash-out is actually available on your timeline. Compare two exits now: a small cash-out refi vs. a first-position HELOC on the finished value; pick the one that leaves you positive cash flow and pays off the rehab lender cleanly. One red flag: don't count on pulling an exact amount for the next deal unless the appraisal and LTV pencil. Next step this week: get a lender quote sheet for both exits and a PM rent letter to validate the numbers.